Oct 5, 2020 - Economy & Business

Drop in labor force participation cut unemployment rate

Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals
Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

The drop in the unemployment rate last month to 7.9% from 8.4% was more the result of people dropping out of the labor force — or giving up looking for work — than it was people finding jobs.

Details: The labor force participation rate decreased by 0.3 percentage point to 61.4% in September and has fallen 2 percentage points from its February levels to the lowest since March 1976.

To put that in perspective: The 2.5 percentage point drop in labor force participation from March to April was the largest in history and the rebound has only gone halfway and now reversed.

  • The employment-population ratio, at 56.6%, is 4.5 percentage points lower than in February.

Watch this space: Women have fared especially poorly in this recession. Women's labor force participation rate dropped to 55.6% in September, the lowest it has been since February 1987.

  • 865,000 women dropped out of the labor force, compared to 216,000 men.

Of note: BLS points out that last month about 4.5 million people were prevented from looking for work due to the pandemic and therefore not counted as unemployed, though this declined from 5.2 million in August.

  • "To be counted as unemployed, by definition, individuals must either be actively looking for work or on temporary layoff," the bureau says.
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